Economic conditions outside of China will remain a “grind" for the next five years, according to Greg Goodman, the head of Australia’s largest warehousing company,
Goodman Group
.

Speaking to The Australian Financial Review after the annual meeting last week, Mr Goodman emphasised the world’s second largest economy will account for almost a third of earnings this year, underscoring the importance of China to the developer’s growing global empire.

Yet it is a symbiotic relationship.

China’s sovereign wealth fund, CIC, holds close to $1.4 billion worth of Goodman stock – a cash injection that helped rescue the company from near oblivion in 2009. According to sources, that accounts for a quarter of CIC’s entire real estate allocation.

However the fund, which typically eschews listed investments, is widely expected to sell the colossal stake and roll into one of Goodman’s numerous unlisted vehicles.

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Yesterday a substantial share holder notice to the Australian stock exchange confirmed CIC did not participate in a $400 million raising executed earlier this month by
Macquarie Group
. As a result of its absence from the placement, CIC’s 17.8 per cent stake has been diluted to 16.8 per cent.

Goodman entered China five years ago and it now dominates the Hong Kong market, but its progress on the mainland has been more sluggish.

Mr Goodman admitted “we pulled up the handbrake during the global financial crisis" but stressed the expansion had gained momentum since with 800,000 sq m of development scheduled for the end of next year, which he said translates into a profit of “around $200 million".

The logistics giant is now the second biggest warehouse developer in the country. Attaining the land remains the greatest obstacle, but Mr Goodman claimed the company has forged close ties with the local government. “We are one of the brands they really like doing business with over there", he said.

The rush into China by corporations around the world has prompted warnings from some quarters.

At a recent Australian Property Council conference, Sam Zell, the billionaire Chicago property baron argued that the country was awash with cash.

He said: “When we started investing in China 12 to 14 years ago, our money had exponential value . . . four years ago, the opposite was the case. There is lots of money in China and, therefore, there are lots of reason for the Chinese to take your money and not listen to you".

Mr Goodman batted away these concerns, insisting “we will make lots of money in China".

The developer’s determination to build its global empire has received backing from some of the most powerful pension and sovereign wealth funds in the world.

And Mr Goodman is confident the money will keep rolling in despite the lacklustre economic environment.

He stressed that although it will be “a bit of a grind outside of China and other parts of Asia" the brand will continue to expand, fuelled by cash injections from yield-hungry investors.

“We have large pools of capital partners around the world that are using this time to invest at what they think is good value to the [government]bond rates around the world," Mr Goodman said.

He pointed out the company’s European fund is generating a return of 8.2 per cent, while rates in European bank accounts are as meagre as 1 per cent.

In fact the EU’s recession has “benefited the company" according to Mr Goodman.

He said, competition has reduced allowing the developer to increase its market share.

The company has forecast a 6 per cent increase in its 2013 earnings to 32.3c